Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
S&P SEASONAL ANALYSIS - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Bounces on Strong Inflation Data

Commodities / Gold & Silver May 14, 2008 - 11:15 AM GMT

By: Adrian_Ash

Commodities THE PRICE OF GOLD BULLION fell at the opening in London on Wednesday, slipping to a 7-session low of $860.50 per ounce before bouncing almost 1.0% as New York opened for business and the US Dollar fell against the Euro.

Wall Street stock futures pointed lower as crude oil dropped 41¢ per barrel to $125.31.


Government bond prices also slipped on strong US inflation data, pushing open-market interest rates higher.

"The Gold Market is at standstill," reckoned Tatsuo Kageyama, a precious metals analyst at Kanetsu Asset Management, in Tokyo this morning.

Pointing to the "psychologically important" level of $850 per ounce – the previous record top of Jan. 1980 – if it's broken "that could prompt a fall to $820 and even to $800," Kageyama told Reuters.

Japanese gold futures ended Wednesday unchanged at ¥2,939 per gram – equal to $868 per ounce – for delivery in April '09.

Tocom gold futures hit a 25-year high above ¥3,300 per gram at the start of March.

Now precious metals analysts at UBS, the troubled Swiss investment bank, forecast "further downside" in Gold , silver and palladium, pointing to "a combination of Dollar strength and profit-taking."

But in the physical bullion markets of Asia and the Middle East , "activity is quite good," according to Frederic Panizzutti, analyst at MKS Finance in Geneva .

In due course, "we expect the market to get back to Gold and push it higher," he adds. "But you need to consolidate somewhere between $850 and $950."

Across in India – the world's hungriest market for physical Gold Bullion – the recent Akshaya Thritiya festival saw a surprise surge in exchange-traded gold fund investment, reports the Economic Times.

Twelve months after the initial launch of these "paper gold" certificates, " Indian Gold ETFs outperformed all asset classes except banking sector mutual funds," the paper says.

During last week's Hindu festival – traditionally a period of strong jewelry sales –"the response for gold ETFs was fantastic on this auspicious [gold buying] occasion," says Rajan Mehta, executive director of the Benchmark Mutual Fund.

"Volumes soared and these two days alone added nearly 120 kg of gold with our custodian."

Here in Europe , in contrast, "we generally see only a little buying interest for either physical or non-physical metal," says Panizzutti at MKS.

But Western investors – particularly high-net worth investors – have made a significant shift into Physical Gold Ownership since the global banking crisis began in summer '07.

For French, German and Italian investors wanting to Buy Gold today the price bounced 0.9% from a one-week low on news that industrial production in the Eurozone grew by only 2.0% in the year to March – down from Feb.'s 3.1% growth.

Just in time for the Euro to gain half-a-cent versus the US Dollar today, European finance ministers this morning welcomed the single currency's recent 4% decline from $1.60.

France 's Christine Lagarde said she believes the Euro remains "10%, 15%, 20% above the appropriate fundamentals." New inflation data from the United States then showed only the slightest drop for April, with average US earnings falling 0.5% over the last 12 months as a result.

Household wealth also took a fresh hit from the collapse in US home prices, adds RealtyTrac, with some 243,353 homes receiving "at least one" foreclosure warning from their lenders in April – up 65% from the same month last year.

"Wall Street's two cynical campaigns to enrich itself by inflating bubbles and draining investor savings (the tech mania and housing bubble) have done more than spawn two unnecessary recessions and a global financial crisis," believes Donald Coxe, head of global strategy at BMO.

"They force investors to rethink their risk appraisals and investment policies."

The Federal Reserve's key interest rate of 2.0% remains way below increases in the cost of living, now pegged at 3.9% year-on-year.

Today the Bank of England in London warned that UK inflation – now rising at a near-12 record – will "lead to a squeeze on real take-home pay which will slow consumer spending and output growth, perhaps sharply."

As in the United States , UK unemployment is now rising on the official data. "The number of unemployed people increased by 14,000 over the last 3 months," said the ONS this morning.

"This quarterly increase in unemployment occurred entirely amongst men."

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in